Netbooks are officially dead, and Windows 8 pulled the trigger

Investigators crowded around the small, lifeless husk laying shattered on the street before them. The morning sun glistened off a cracked 10-inch display; broken chips and transistors littered the ground like so many spent pennies. Sounds of revelry echoed from somewhere far away as the townsfolk celebrated a bright future full of tablets, phablets and wirelessly charging phones, unaware of the death in their midst.

One investigator kneeled down and depressed the gadget’s power button. Three seconds later, a blue screen of death slowly faded to black on the broken screen.

“It’s official,” the man said. “The netbook is dead.”

“I think we know who is responsible for this,” one of his colleagues replied. “I’ll start hauling tablets down to the station for questioning.”

The end of an era

Netbooks have been on life support for a while now. In the past year, Dell and Toshiba formally bowed out of the market, while Lenovo’s S-series netbooks have been on-again, off-again, but mostly off-again. (They’re currently available as part of a limited-time offer, most likely to drum up interest in the company’s new, full-sized S-series offerings.) Back in May, the Canalys research firm announced that netbook sales dropped for the sixth consecutive quarter, and by a whopping 34 percent compared to the previous year.

Two companies stayed true to the first ultra-portable form factor through all the doom and gloom: Acer and Asus. But no longer. Both companies plan on pulling the plug on netbooks, DigiTimes reports.

Acer has yet to officially confirm the report, but nevertheless, Asus’ withdrawal represents the death blow. Asus produced the first computer to carry the netbook name — the original Eee PC — and continued releasing netbooks faithfully ever since. Until now, that is.

What motivated Asus to snuff out its own offspring? The inspiration seems straightforward at first glance: Asus CEO Jerry Shen told DigiTimes that the company “plans to have its Transformer tablet PCs fill the 10-inch mobile device market, replacing its netbook product line.”

As with any good murder mystery, however, things aren’t as simple as they seem.

Tablets: Perp or patsy?

The rise of tablets left netbooks bruised, battered and reeling. It’s hard to gloss over the fact that netbook sales started their gargantuan nose dive pretty much the exact moment that the original iPad was announced in 2010. Netbooks are slow and frumpy; tablets are responsive and sexy. To make matters worse, Windows never really fit well on a 10-inch screen, while tablet operating systems were designed around tinier displays. Frankly, it’s no surprise that the mainstream has diverted its attention away from netbooks to focus on tablets.

The netbook form factor still holds some value in some niche uses. For instance, business travelers with heavy workloads tend to lean towards portable PCs with physical keyboards. Just this February, Asus marketing VP Kevin Huang told PCWorld that “Asus created the netbook category, and I think netbooks today still provide the most cost-effective computing product solution servicing certain user segments–i.e., the K-12 education market.”

A proper investigator perks his ears up when someone displays a sudden change in behavior. Why did Asus change its tune so dramatically in such a short time?

The DigiTimes report says it was due to “a sharp drop in demand in emerging markets,” one of the last bastions of netbook growth. I say hogwash: Windows 8 drove the final nail into the netbook’s coffin.

Windows 8: Microsoft kills the netbook

Manufacturers struggled to make money with netbooks in the best of times; even with low-end processors and a small, low-resolution screen, it’s hard to make money on a PC that will only sell for $200 to $350 at retail.

In fact, screen resolutions may be one of the major factors in the death of the netbook. Most notebooks stick to a 1024 x 600 display; Windows 8 requires 1024 x 768 at a minimum. You need a full 1366 x 768 resolution (seen on most mainstream laptops in sizes up to 15.6-inches) to take advantage of the operating system’s snap feature.

Display costs consume a large chunk of a laptop’s overall component costs. Manufacturers who have been able to draw some slim profits from netbooks would be in over their heads if they add higher-cost, higher-resolution displays to goad Windows 8 into working on the pint-sized PCs… and that’s not even counting the cost of upgrading to touchscreens to take advantage of Windows 8’s finger-friendly features, something tablets sport by default.

Heaping on even more expense, licensing costs for Windows RT are rumored to be $50 to $100, depending on the version, with no low-cost equivalent of the Windows 7 Starter edition found on so many netbooks being available. Compare that to the price of the open-source Android OS that powers so many tablets: $0. To be fair, several manufacturers pay Microsoft a licensing fee for each Android device they make to avoid possible patent litigation — but Asus isn’t one of them.

Meanwhile, all the spiritual successors to netbooks yield higher margins for manufacturers: Ultrabooks, tablet-notebook hybrids, and low-cost ultrathin laptops. Manufacturers will never be able to create profit from sheer netbook sales volumes again. Investing in Windows 8 and its higher-costing display requirements just doesn’t make sense.

When you consider the evidence, the culprit is clear: tablets and shifting consumer desires may have left netbooks in a critical state, but it was Windows 8 that killed the netbook off for good. Moore’s law is a cruel mistress indeed.